3. Critically examine the status of India's Exports
and Imports, and efforts to improve the situation.

4. Analyze Balance of Payment situation of India
and explain methods of correction of disequilibrium in
BOP

5. Explain WTO structure and main functions of WTO.

6. Write short notes on any two of the following :-

(a) International Trade Blocks.

(b) Income and Substitution Effect.

(c) Non-Price Competition.

(d) Free Trade Vs. Protection.

Section B

7. Solve and analyze following case :

REMAINS OF A DREAM

In the 1980s, I worked as a chemical analyst for a
transnational in Germany, but kept thinking about
shifting to India.

Opportunity knocked when I saw an advertisement by the
Uttar Pradesh government inviting NM professionals to
start a chemical unit in the newly identified Basti
Chemical Industrial Complex. I hail from Lucknow. •
Hence, this was attractive. I inquired from the Indian
High Commission and was told that there is single window
clearance for NRI investors. The brochure said several
things about the benefits-excise and sales tax holiday
for five years, uninterrupted power supply, low rate of
interest on loans, and clearance of application within
30 days.

I started the application formalities for a chemical
unit. Once the application was accepted, I requested for
long leave from my employers. I also inquired from my
relatives in Lucknow and was told that the Uttar Pradesh
government's intentions are clear, and development work
is progressing at fast speed.

Every now and then, I received a letter from the
ministry of industry in Uttar Pradesh to furnish some
paper or the other, as part of procedural formalities.
After three months, I received my provisional sanction
letter for allotment of land, and term loan. The letter
also stated that within six months, I must take
possession of the land, and initiate construction.
Otherwise, the deposited amount (Rs. 1 lakh as, part of
my contribution) will be forfeited. I resigned from the
company, and shifted permanently to India, since my
employer turned down my request for long leave. On
reaching the complex, I was surprised to see that the
Uttar Pradesh State Industrial Development Corporation.
(UPSIDC) had actually developed the land in terms of
markers, and signboards, compared to what I had seen on
my last visit.

Though roads were not fully laid, it was evident that
work was in progress. I took possession of my land and
started construction.

Meanwhile, I approached the UPFC for granting me the
term loan for ordering the plant and machinery. The
first obstacle came from the Uttar Pradesh State
Electricity Board (now Uttar Pradesh Power Corporation).
The electricity supply to the complex was not yet
available. On Inquiring, I was told that the plan had
been sanctioned, but required clearance from the Power
ministry, before undertaking further work. The
approximate time to get grid supply ranged between four
and six months.

The next obstacle carne from the Uttar Pradesh Financial
Corporation (UPFC). It could release the first
installment after I completed construction till the
plinth level. I continued work with the help of a diesel
generating set. It took another month to reach the
plinth level.

But before I could request UPFC to release my first
installment, I received a letter from UPFC . that I had
to deposit interest against the amount paid to the
UPSIDC for interest had to be paid land possession. This
was a shock, because yen before anything was produced.

But I had no altematitv because the fiat installment was
due. The UPFC promptly rele4ase the first installment
after inspecting the construction. It helped rine
continue construction work, and also book for plant and
machinery

Six months went by. Construction was almost complete. I
had received three installments from the Uttar Pradesh
Financial Corporation (UPFC). Each time the payment of
Interest was due, the required sum was adjusted from the
installment released. If there was any shortfall in
money required for construction, I paid from my own
pocket.

But after nine months, my coffers went empty. Machinery
suppliers were after me, for payment. UPFC insisted on
interest payments, because this was the last installment
of my term loan and interest due couldn't be deducted
from future installments. I borrowed from family and
friends and paid up. Then I received the final
installment from UPFC for plant and machinery, with
another notice that the yearly installment for the
principal was due.

Within two months, machinery was commissioned at the
site But . electricity was yet to reach the complex. In
the previous year, I had visited the Uttar Pradesh State
Electricity Board (UPSEB) office innumerable times. I
also approached the industry association to assist me.
But all my efforts were in vain. This did not help me,
or others like me, to get the grid supply.

There were 14 others who were in the same boat. The
biggest company of them all - obviousl with contacts at
higher levels-arranged for grid supply from the rural
feeder. But that plan also did no take, off, because the
rural feeder supplied poor quality power for a mere six
hours. A process industry requires 24 hours of
uninterrupted electricity supply without load
fluctuations. It is precisely because of this that all
15 of us, who were waiting for electricity, had insisted
on industrial power from UPSEB.

All plans failed. Captive generation was not a viable
alternative now. And we continued to wait for the grid
supply, we met the loner minister for Industry and
pleaded our case. He assured us that he would take up
the case with the power ministry.

Meanwhile, I defaulted on interest payments.. So did the
others The final blow came in the Assembly elections,
when both the sitting : Member of Legislative Assembly,
from Basti, and the state industrial minister lost their
seats. Suddenly, everything-from road construction
work,. to the laying of sewer and phone lines-came .to a
standstill. Only the police post and the UPSKB rural
feeder office remained. The new Incumbent in the
industrial ministry hailed from Saharanpur, so the
thrust of the ministry changed Basti was not on their
psiority list anymore. After waiting for two years,
UPSEB was not able to connect the complex with grid
supply.

In the end, UPFC initiated recovery action and sealed my
unit. Besides, they claimed that I could not get NRI
treatment, with preferential interest rates, because I
had permanently moved to India. Thus, there were also
plans to file a case against me on account of
misinforming the corporation. Experts suggested I should
file for insolvency if I wanted to avoid going to
prison. This I did in 1994. I spent Rs. 15 lakh from my
own pocket.

Now, all that remains of a entrepreneurial dream is a
sealed chemical unit in Basti and a complex legal
tangle.

I was better off working faith transnational in Germany.
Power does not come out of the barrel of a gun. A gun's
barrel comes out of power, especially when the latter
does not exist.

Questions :

1.
Identify and analyse the environmental factors in this
case.

2: Who
were all responsible for this tragic end ?

3. Is
it right pn the part of the government and promotional
agencies to woo entrepreneurs by promising facilities
and incentives which they are not sure of being able to
provide ?

4.
Should there be legislation to compensate entrepreneurs
for the loss suffered due to the irresponsibility of
public agencies? What problems are likely to be solved
and created by such a legislation ?

5.
What are the lessons of this case for an entrepreneur
and government and promotional agencies ?